Client Logo About Tecta Solar Tecta Solar is a division of Tecta America. Tecta America is the largest commercial roofer in the US, with 3,000 employees, $420 million in 2011 Sales. We are the general contractor for our installations – our employees do the installations. Subcontract electrical work locally. Commercial and small utility-scale projects: 200 kW to 10 MW. Customers are industry, municipalities, real estate developers, schools. To provide a full solar package: • PPAs structured • Tax and financial leasing, debt placement • Incentive capture, • SREC monitization (selling only for our own projects) • Operate and maintain Here today: Ken Beiser, Katie Riedo Ken: 1 267 460 0525 Katie: 215 518 7919
Client Logo Incentive Types Policy/Regulation/ Description No. of States offers Incentive Renewable Portfolio Law for utilities to procure certain amount of specific type of Standard Solar Set-aside technology such as solar or DG. 16 states + DC (SRECs) Leads to the creation and trade of SRECs. Tax Credit Reduce tax payment by % of PV system cost 22 states + DC Net Metering Allow to bank excess electricity on the grid and reduce bill 43 states + DC Rebate Partial refund to purchased systems 15 states + DC Sales Tax Exemption Elimination of the sales taxes owed for purchased systems 21 states Elimination of the property taxes owed for purchased Property Tax Exemption 30 states systems installed on house/building Solarbuzz
National Weighted Average Client Logo System Prices Falling SEIA Market Research
Client Logo SRECs bridge some gaps SRECs provide a material part of the gap in returns. But if well-structured and well-facilitated, a good RPS program can LOWER the overall cost of capital. To do that, RPS programs can be run to enhance certainty of value. Need of systems owners: Lower cost of capital to lower customer power prices, while making a decent risk- adjusted return - Lenders are reluctant to lend against uncontracted SREC revenue - Tax-equity is reluctant to provide funding against uncontracted revenue - Contracting for retail power is a 2-3 year forward market, yet solar required a 15 to 20 year commitment to capture full value. Mismatches result, as solar needs long term contracts, and EDC’s are used to short term. Confidential
Client Logo Returns as a function of SRECs Internal Rate of Return - IRR 20.0% 18.0% 16.0% 14.0% Includes 12.0% value of 10.0% 8.0% Federal ITC, 6.0% IRR MACRS on 4.0% this 1 MWp 2.0% 0.0% project State Washington DC Maryland Massachusetts Maryland at Market New Jersey Virginia 5-year forward at 5-year forward at 5 year SREC Assumptions 60% of ACP $160 $120 35% of ACP forward at $90 Spot at $10 Insolation Factor 1226 1227 1209 1227 1185 1274 IRR 18.9% 10.1% 8.8% 7.6% 5.6% 1.7% Avoided Cost of power 0.134 0.118 0.145 0.118 0.139 0.077
Client Logo Certainty through RPS Certainty: Liquidity, Transparency, Long Term Value, Simplicity: Some liquidity: serves as a reference for the whole market, provides comfort that there is 1. validation of values, highlights changing risks and rewards. Liquidity requires speculative buyers to stand equivalent to others. Transparency: How many facilities, where, when allow prediction of supply. Purchases and 2. sales of SRECS validates Prices and Quantities: High, low and average of monthly deliveries is not enough. Volume is meaningful in a retail vs.. wholesale market where aggregation is expensive. Don’t need to know buyers and sellers. Long Term Value: Long and medium term contracts are to be encouraged! 3. • NJ “SREC Loan Programs” • MA SREC Auction mechanism – soft ‘floor’ price is intended • Utility tenders > 5 years are helpful. Spot/ Near term tenders are not. 4. Simplicity: Lenders and tax investors can only accommodate so much complexity. Conditionality of processes, thresholds, participation is challenging to convert to cash flows. Uncertainty is always repriced to the worst case scenario Confidential
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